U.S. stocks finished higher Friday, with the Nasdaq Composite closing out June with its strongest first-half of a year since 1983, as investors hoped the Federal Reserve might be able to back off its inflation battle more quickly than Chair Jerome Powell has suggested.
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How stock indexes traded
- The Dow Jones Industrial Average rose 285.18 points, or 0.8%, to close at 34,407.60
- The S&P 500 gained 53.94 points, or 1.2%, to finish at 4,450.38, its highest closing value since April 20, 2022.
- The Nasdaq Composite climbed 196.59 points, or 1.4%, to end at 13,787.92, marking its highest closing value since April 7, 2022.
For the week, the Dow gained 2%, the S&P 500 advanced 2.3% and the Nasdaq increased 2.2%, according to Dow Jones Market Data. All three indexes rose in June, with the S&P 500 climbing for a fourth straight month to book its longest monthly win streak since August 2021. The Nasdaq also climbed for a fourth consecutive month to score its longest such win streak since April 2021.
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What’s drove markets
The final trading day of the week, month and quarter presented a positive picture for U.S. stocks as the main indexes advanced following the latest inflation report.
“Clearly today the market likes and is responding to the inflation data,” said Chris Fasciano, portfolio manager at Commonwealth Financial Network, in a phone interview Friday. “It continues to show softening inflation and that’s clearly what the Fed’s looking for,” he said. “I think investors are comfortable right now with a soft-landing scenario” for the economy.
On Friday, data showed U.S. inflation measured by the personal-consumption-expenditures price index eased to 3.8% in May on a 12-month basis, the slowest increase since April 2021.
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The PCE price index edged up 0.1% on a month-over-month basis in May, while core prices, which exclude volatile food and energy products, increased by 0.3%. The government’s PCE inflation report was in line with economists’ expectations.
The data added to an increasingly upbeat portrait of a U.S. economy, which has continued to expand despite the Fed’s aggressive tightening of monetary policy. Gross domestic product in the U.S. expanded 2% during the first quarter, much stronger than the previous 1.3% reading, data released on Thursday showed.
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In other U.S. economic updates, the University of Michigan said Friday the final reading of its consumer-sentiment index for June improved to 64.4. That’s a four-month high.
Still, the PCE report showed consumer spending rose just 0.1% in May, slower than economists had anticipated.
The Federal Reserve has been raising interest rates since 2022 to cool the economy and tame inflation. Fed Chair Jerome Powell said earlier this week that he didn’t expect inflation in the U.S. to return to the central bank’s 2% target until 2025.
“Right now, the Fed’s job is not clear-cut,” said George Mateyo, the chief investment officer of Key Private Bank, in emailed commentary Friday. “While they may not be done with rake hikes, perhaps they don’t have much more work to do.”
The U.S. stock market has rallied this month, bringing the S&P 500 index’s gains this quarter to 8.3%. The S&P 500 jumped 15.9% in the first six months of this year, while the tech-heavy Nasdaq soared 31.7% for its best first half since 1983, according to Dow Jones Market Data.
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Companies in focus
- Nike Inc. shares fell around 2.7% after the retailer’s fourth-quarter profit came in below Wall Street expectations amid markdowns and weaker demand for sneakers and clothing
- Constellation Brands Inc. slipped 0.3% after posting better-than-expected fiscal first-quarter earnings on Friday, boosted by strength in its beer business where sales rose 11% due to strong growth for Modelo Especial, which recently replaced Bud Light as the bestselling beer in the U.S.
- Apple Inc. shares rose 2.3%, with the company clinching a market value of $3 trillion. Apple Wall Street analysts have grown even more bullish on the iPhone maker as the company was initiated with a Buy rating at Citi. Analyst Atif Malik set a price target of $240 on the stock.
- Carnival Corp. shares jumped 9.7% after a broker upgrade, capping off what has been a strong month for cruise stocks.
